The Normal Town Council approved up to $800,000 in tax breaks for a shopping center owner at Monday night's meeting.
In return, officials say the town could potentially gain $4.8 million in new tax revenue for giving the rebate to Phillips Edison, which owns the twin shopping centers on the northeast corner of College Avenue and Veterans Parkway. The tax breaks passed on a 5-to-2 vote.
Council member Jeff Fritzen, who supported the tax rebate, said the incentive is a tried and true method.
“This not only would protect the sales tax generator, but possibly boost our sales tax revenue, and that represents a public strategy that Normal has used to its advantage,” said Fritzen.
Council members Kathleen Lorenz and Scott Preston voted against the plan, saying the risks were too high.
Lorenz said the shopping centers already had their location by Panera going for them and the council had already made enough investments to Veterans Parkway over the years.
"As a council, and councils before me, we have invested handsomely in our portion of our main street of Veterans Parkway, and I would hope that investors would take note of (that) prime piece of real estate," Lorenz said. "I'm sure that's why (Phillips Edison) bought it in the first place in 2013. I think no matter what, under any circumstances, (they) will do just fine there."
Preston said he felt the investment could be made without Normal's help, and he would rather see efforts going into building projects from scratch.
"Whether or not this investment happens is entirely within the control of Phillips Edison," Preston said. "It's not as though the decision couldn't be made without our incentive."
He added, "Another thing I think differentiates this proposal (from others) where we have provided public assistance and incentives is the concept of building something out of nothing and working with a developer who has yet to purchase a property or land that they want to develop into something productive, which it currently isn't. In this case, Phillips Edison owns these properties. They have a vested interest in filling that space whether we're involved or not because they own the property and they're running a business."
The town will rebate up to $800,000 in sales tax revenue back to Phillips Edison over a 10-year period, equivalent to around 20 percent of the total cost of the renovations. The town expects to see $4.8 million in new sales and tax revenue sparked by the renovations. (That $800,000 tax break would drop accordingly if Phillips Edison fails to make its own $4.1 million investment.)
City Manager Mark Peterson said he believes remodeling the building itself will diminish the risk in offering the incentives.
"I'm probably more excited about the fact that they're putting investments in things like roof systems, HVAC systems, parking lots, landscaping and those types of things that sort of give me a sense that this center's going to be around, and it's a viable center," said Peterson.
Peterson spoke on GLT's Sound Ideas on Tuesday and said this tax break isn't a new concept for the town and can be traced back to the early 1980s, when the old College Hills mall received a sales tax rebate from Normal.
"It's actually been this way for quite some time," Peterson said. "In fact, if you look at most of the major developments on Veterans Parkway, whether you're in Bloomington or Normal, the vast majority of those have benefited from some public-private partnership."
Peterson also said this decision wouldn't hurt the town, regardless of the shopping center's success, because there are no direct investments being made.
"I think this is an important distinction - this is a sharing of new revenue," Peterson said. "It's not as if the town is writing checks or investing directly in this center. We're sharing new income that they're creating. There's absolutely no risk to the community. If they don't perform, they don't get paid."
Owner Phillips Edison has not announced a timetable for the construction work on the two tracts at College and Veterans, one of which used to hold Dick’s Sporting Goods.
Editor's note: GLT General Manager R.C. McBride is a Normal Town Council member.
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